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COAL IN THE WORLD AND IN TURKEY Outlook, geopolitics, policies and future prospects Dr. Nejat Tamzok Planning Manager and Strategic Planning Coordinator / Turkish Coal Enterprises Coal in the World and in Turkey Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences Bilkent University Energy Economics, Policy and Security (Master of Arts Program) Faculty of Economics, Administrative and Social Sciences Bilkent University 1

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COAL IN THE WORLD AND IN TURKEY

Outlook, geopolitics, policies and future prospects

Dr. Nejat Tamzok Planning Manager and Strategic Planning Coordinator / Turkish Coal Enterprises

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Energy Economics, Policy and Security (Master of Arts Program)

Faculty of Economics, Administrative and Social Sciences

Bilkent University

1

CONTENT I. INTRODUCTION TO COAL

II. THE PAST, TODAY, AND FUTURE OF COAL

III. WORLD COAL INDUSTRY OUTLOOK

IV. GLOBAL GEOPOLITICS OF COAL

V. COAL, ENVIRONMENT AND TECHNOLOGY

VI. TURKEY’S COAL INDUSTRY OUTLOOK

VI.I. TURKEY’S ENERGY DEMAND AND COAL

VI.II. TURKEY’S COAL RESOURCES

VI.III. COAL PRODUCTION AND CONSUMPTION IN TURKEY

VI.IV. COAL IMPORTS

VI.V. COAL AND ELECTRICITY GENERATION IN TURKEY

VI.VI. TURKISH COAL INDUSTRY AND PUBLIC POLICIES: ON THE BRINK

OF CHANGE

VI.VII. FUTURE OF DOMESTIC COAL IN TURKEY

REFERENCES

2

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

I. INTRODUCTION

TO

COAL

3

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WHAT IS COAL?

Coal is a combustible, sedimentary,

organic rock, which is composed mainly

of carbon, hydrogen and oxygen.

Coal is a fossil fuel and is the altered

remains of prehistoric vegetation that

originally accumulated in swamps and

peat bogs.

A form of rock rich in organic carbon.

Able to be burned as a source of energy.

Contains; organic carbon, inorganic

elements (Fe, Al, CaCO3, trace metals),

form ash, water.

4

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

COAL FORMATION

5

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

COALIFICATION - RANK OF COAL

6

PEAT LIGNITE SUBBITUMINOUS BITUMINOUS ANTHRACITE

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

CARBON AND HEAT CONTENT OF COAL

7

Meta-anthracite

Anthracite

Semi-anthracite

Low volatile bituminous

Medium volatile bituminous

Hig

h v

ola

tile

bit

um

inou

s

Hig

h v

ola

tile

A b

itu

min

ou

s

Hig

h v

ola

tile

B b

itu

min

ou

s

or

Su

bb

itu

min

ou

s B

Su

bb

itu

min

ou

s B

Su

bb

itu

min

ou

s C

Lig

nit

e 3

.300

GROSS CALORIFIC VALUE (KCAL/KG)

3.9

00

4.6

00

5.3

00

7.2

50

7.8

00

8.9

00

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Source: Stanley P. Schweinfurth

TYPES OF COAL?

8

CARBON/ENERGY CONTENT OF COAL

MOISTURE CONTENT OF COAL

HIGH

HIGH

Low Rank Coals

47%

Hard Coal

53%

Lignite

17%

Sub-

Bituminous

30%

Bituminous

52%

Anthracite

1%

Thermal

Steam Coal

Metallurgical

Coking Coal

% O

F W

OR

LD

RE

SE

RV

ES

USES Largely

power

generation

Power generation,

cement manufacture,

industrial uses

Power generation,

cement manufacture,

industrial uses

Manufacture

of iron and

steel

Domestic/industrial

including smokeless

fuel

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Source: World Coal Institute

FINDING COAL

Coal reserves are discovered

through exploration activities. The

process usually involves creating a

geological map of the area, then

carrying out geochemical and

geophysical surveys, followed by

exploration drilling. This allows an

accurate picture of the area to be

developed.

The area will only ever become a

mine if it is large enough and of

sufficient quality that the coal can

be economically recovered. Once

this has been confirmed, mining

operations begin.

9

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

COAL MINING

10

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

COAL PREPARATION

11

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

USES OF COAL

12

ELECTRICITY GENERATION IRON&STEEL PRODUCTION

INDUSTRIAL PLANTS (e.g. CEMENT FACTORIES)

CHEMICALS

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

II. THE PAST, TODAY, AND FUTURE OF

COAL

13

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

0

10

20

30

40

50

60

70

80

90

1850

1871

1883

1895

1908

1919

1930

1942

1953

1967

1978

1989

2000

2011

2022

2033

% ?

SHORT HISTORY OF COAL - I

14

World energy consumption by source, 1850- 2014 Data: J. Laherrere 2005, IEA Data Services, IEA Key World

Energy Statistics 2005-2013

>2600 years ago in ancient cultures for heating.

1000 BC: the first known commercial use in

China for smelting copper and for casting coins.

Not much use of coal between 400-1200 A.D.

18th and 19th Century Industrial Revolution:

Jump in coal demand. Steam generators,

locomotives, and eventually electric generators.

1910-1920: coal’s share at climax (60%).

1920-1970: rise of oil, fall of coal.

Mid-60’s: king coal left his throne to oil.

Early 70’s: A new rival for coal, natural gas.

Coal’s share drops to 25%.

1970’s – oil crises: end of the retreat period for

coal despite rising environmentalist movements

and growing natural gas demand.

0

10

20

30

40

50

60

70

80

90

18

50

18

71

18

83

18

95

19

08

19

19

19

30

19

42

19

53

19

67

19

78

19

89

20

00

20

11

20

22

20

33

%

OilCoalNatural gasBiomassNuclearHydroOther renewables

?

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

SHORT HISTORY OF COAL - II

15

World fossil fuel consumptions, 1999- 2014, Data: IEA Data Services, IEA Key World Energy Statistics 2005-

2014

Expectation of the past: When viewed from 80’s or 90’s, it was not easy to predict that the share of coal in the global energy equation will increase in the future. The estimates made were pointing a continuous decline in the global coal consumption.

Reality of today: However, subsequent developments were totaly opposite of the expectations. All the predictions pointing out that the global coal consumption entered a period of decline crashed with the twenty-first century. There was an explosion in coal production and consumption. New age would almost be exactly a "Coal Age" from the beginning until today.

While global energy consumption increased by only 36 percent in the first 13 years of the new century, the increase in coal consumption took place at a much higher level with 63 percent.

In the same period, the growth rate in the global oil consumption was only 17 percent and the increase in global natural gas consumption was 39 percent.

2000

2500

3000

3500

4000

450019

99

20

01

20

03

20

05

20

07

20

09

20

11

Mto

e

Oil Coal Natural gas

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WORLD TOTAL PRIMARY ENERGY SUPPLY

BY SOURCE (2012)

16

Coal

29,0%

Oil

31,4%

Natural gas

21,3%

Nuclear

4,8%

Hydro

2,4%

Biofuels and

waste

10,0%

Other

1,1%

WORLD TOTAL:

13.371 Mtoe

COAL’S SHARE:

3.878 Mtoe

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: IEA

WORLD ELECTRICITY GENERATION

BY SOURCE (2012)

17

Coal

40,4%

Oil

5,0%

Natural gas

22,5% Nuclear

10,9%

Hydro

16,2%

Other

5,0% WORLD TOTAL:

22.668 TWh

COAL’S SHARE:

9.158 Twh

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Source: IEA

FUTURE OF COAL

18

Weight of fossil fuels in the global

energy consumption:

1973: %97,2 and 2012: %91,7

Fierce competition between the three

fossil fuels today and probably for

some more decades.

In the race between fossil fuels in the

last century, coal's performance was

much higher against its arch rivals, oil

and natural gas. Coal has caught a

serious chance to recapture the

podium.

The number of analyses pointing out

that the coal consumption will pass the

oil consumption within a few years has

increased each year.

Primary

Energy

Electricity

Generation

1973 2012 1973 2012

Coal 24,6 29,0 38,3 40,4

Oil 46,1 31,4 24,8 5,0

Natural gas 16,0 21,3 12,1 22,5

Nuclear 0,9 4,8 3,3 10,9

Biofuels/waste 10,5 10,0 - -

Hydro 1,8 2,4 20,9 16,2

Other 0,1 1,1 0,6 5,0

Primary energy and electricity generation by source,

1973-2012, Source: IEA Key World Energy Statistics 2005-2014

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

FUTURE OF COAL

19

Year Coal Oil Gas Nuclear Other

2012 29,0 31,4 21,3 4,8 13,5

2040 (IEA New Policy Scenario) 24,3 26,0 24,2 6,6 18,9

2040 (IEA Current Policies Scenario) 29,2 26,6 23,7 5,0 15,4

2040 (IEA 450 Scenario) 16,6 20,7 22,2 10,7 29,8

2040 (DOE/EIA Reference Scenario) 26,8 28,4 23,3 7,0 14,5

2040 (DOE/EIA High Economic Growth) 31,4 27,3 21,6 6,3 13,5

2040 (DOE/EIA Low Economic Growth) 24,8 28,2 24,2 7,7 15,0

2040 (DOE/EIA High Oil Price Case) 30,2 27,0 22,1 6,5 14,1

2040 (DOE/EIA Low Oil Price Case) 26,8 29,6 22,8 6,8 14,0

PROJECTIONS ON WORLD TPES BY SOURCE (%)

Year Coal Oil Gas Nuclear Other

2012 40,5 5,0 22,5 10,8 21,2

2040 (IEA New Policy Scenario) 30,5 1,2 23,7 11,6 33,0

2040 (IEA Current Policies Scenario) 40,3 1,3 24,6 8,8 25,1

2040 (IEA 450 Scenario) 13,1 0,7 16,5 18,4 51,3

2040 (DOE/EIA Reference Scenario) 35,6 1,7 24,0 14,1 24,6

PROJECTIONS ON WORLD ELECTRICITY GENERATION BY SOURCE (%)

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

FUTURE OF COAL

20

When we look at its first 13 years, the twenty-first century showed a

"Coal Age" feature. During this period, compared with total energy

consumption or competitor energy resources, global coal

consumption grew much faster. Now the matter of curiosity is how

the global energy equation to be shaped in the rest of the century.

Will rise of the coal continue at the same rate? Which will be the

winner in the competition between fossil fuels? And most

importantly, at what level will be the chance to compete with

alternative or clean energy sources, for fossil fuels.

And a final question: Where will coal go?

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

III. WORLD

COAL INDUSTRY

OUTLOOK

21

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WORLD COAL RESERVES

22

Anthra

cite and

bitumin

ous

403 BT

Subbitu

minous

287 BT

Lignite

201 BT WORLD TOTAL:

892

billion tonnes Source: Encyclopǣdia Britannica

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WORLD COAL RESERVES

23

US

237,3

Russia

157

China

114,5

Australia

76,4

India

60,6

Germany

40,5

Ukraine

33,9

Kazakhstan

33,6

S.Africa

30,2 Other

108

billion tons

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: WEC

WORLD COAL PRODUCTION BY YEARS

24

3.000

4.000

5.000

6.000

7.000

8.000

9.000

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

Mil

lio

n t

on

s

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: BP

WORLD COAL PRODUCTION, 2014

25

China

3.874

US

907 India

644

Australia

492

Indonesia

458

Russia

358

S.Africa

261

Germany

186

Poland

137

Kazakhstan

109

Colombia

89

Canada

69

Turkey

64

Other

513 million tons

Data: BP 2015, Turkey’s 2014 coal production figure is 70,6 Mtons in BP but 64,1 Mtons in IEA and MENR

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WORLD COAL CONSUMPTION BY YEARS

26

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.50019

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

Mto

e

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: BP

WORLD COAL CONSUMPTIONS, 2014

27

China

3.909

India

907

US

835

Germany

236

Russia

201

Japan

188

S.Africa

174 S.Korea

133

Australia

116

Turkey

94

Other

1.129

million tons

China

1.962

US

453

India

360

Japan

127 S.Africa

89

Russia

85

S.Korea

85

Germany

77 Indonesia

61

Poland

53

Australia

44

Taiwan

41

Turkey

36

Other

408

mtoe

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: BP

PER CAPITA COAL CONSUMPTIONS, 2014

28

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

tce/

cap

ita

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

COAL AND ELECTRICITY GENERATION

29

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2040

2030

2020

2012

1990

Coal Oil Gas Nuclear Other

0,0

20,0

40,0

60,0

80,0

100,0 92,8 84,2

76,1 75,7 71,1 68,8 61,5 53,8 48,7 45,6 38,3

29,3 28,3 %

Coal’s share in global electricity generation by years (IEA current policies scenario)

Coal’s share in electricity generation by countries, 2012

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: IEA

WORLD COAL TRADE

30

0

200

400

600

800

1.000

1.200

1.400

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

Mil

lio

n t

on

s

Steam coal Coking coal

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: IEA

WORLD COAL TRADE

31

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

-400

-300

-200

-100

0

100

200

300

400

500

Ind

ones

ia

Au

stra

lia

Russ

ia

US

Colo

mbia

S.A

fric

a

Can

ada

Kaz

akhst

an

Mong

oli

a

N.K

ore

a

Vie

tnam

Pola

nd

Th

aila

nd

Bra

zil

Ital

y

Spai

n

Mal

esia

Tu

rkey

Fra

nce

Net

her

land

UK

Ger

man

y

Tai

wan

S.K

ore

a

Ind

ia

Jap

an

Chin

a

Oth

er

Mil

lio

n t

on

s

Export Import

WORLD COAL TRADE, 2013

32

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: IEA

IV. GLOBAL

GEOPOLITICS

OF COAL

33

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WORLD COAL RESERVES

34

I - Question marks on adequacy and reliability of global coal reserves - Sufficiency problem

119

109

59.6

54.1 47.3

52.5

0

20

40

60

80

100

120

Coal Gas Oil

Yea

rs

00: WEC

00: BP

Remaining lifespan of fossil fuels (years) Data: WEC, BP

0

50

100

150

200

250

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

20

10

20

13

20

16

20

19

Yea

rs

Coal

Oil

Gas

0

50

100

150

200

250

19

80

19

84

19

88

19

92

19

96

20

00

20

04

20

08

20

12

20

16

20

20

20

24

20

28

Yea

rs Coal

Oil

Gas

Lifespan of fossil fuels by years

Lifespan of coal with a consumption rate of 4.5%/y

?

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WORLD COAL RESERVES

35

I - Question marks on adequacy and reliability of global coal reserves - Sufficiency problem

World coal reserv figures and remaining lifespan of reserves are seriously

controversial.

That the sources used to collect the world coal reserve figures generally not

reliable, old dated and that the numbers exaggerated are frequently put

forwarded.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

WORLD COAL RESERVES

36

II – Control of a small number of country on the large portion of reserves

0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8 9 10

%

Indonesia

S.Africa

Kazakhstan

Ukraine

Germany

India

Australia

China

Russia

US

Shares of top ten countries in global coal reserves Only one country has 26.6% of global

coal reserves while this figure is 15.7% for oil reserves and 18.2% for natural gas reserves.

Ten countries have 91.1% of global coal reserves while this figure is 85% for oil reserves and 79.1% for natural gas reserves.

0

20

40

60

80

100

1 2 3 4 5 6 7 8 9 10

%

Number of country

Coal Oil Gas

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: WEC

WORLD COAL PRODUCTION AND CONSUMPTION

37

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

19

85

19

88

19

91

19

94

19

97

20

00

20

03

20

06

20

09

20

12

%

Other

Asia-Pacific

Former Soviet

Union

EU-27

North America

III – Axis shift in production and consumption geographies

Shift in the production geography

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

19

85

19

88

19

91

19

94

19

97

20

00

20

03

20

06

20

09

20

12

%

Other

Asia-Pacific

Former Soviet

Union

EU-27

North America

Shift in the consumption geography

(BP 2015)

While US and EU-27 aggregate share in the global coal production was 44% and Asia-Pacific share was

31% in 1985, this table has reversed today and the shares of parties have been 17% and 69% respectively.

While US and EU-27 aggregate share in the global coal consumption was approximately 45% and Asia-

Pacific share was 32% in 1985, the shares of parties have been 19% and 72% today.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: BP

GLOBAL COAL MARKETS AND COMPETITION

38

IV – Weak competition in global coal markets

Increasingly greater portion of global coal

production is collected in the hands of a

smaller number of countries.

While approximately 86% of total coal exports

made by only 8 countries in 1991, over 90% is

made by only 8 countries today.

The effectiveness of a small number of multi-

national companies in the global coal markets

is much greater extent than many other

commodity markets. Most of the world coal

trade is under the control of few large firms.

World coal trade seem to be stuck in a

monopoly of only 10 countries and an

economic union. Five of the ten countries are

the exporters and the other five and EU-27 are

the importers. 0

10

20

30

40

50

60

70

80

90

100

1 2 3 4 5 6 7 8

%

Kazakhstan

Canada

S. Africa

Colombia

US

Russia

Australia

Indonesia

Shares of top eight countries in global coal market

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: BP

GLOBAL COAL MARKET PRICES

39

V – Change in price behavior

0

50

100

150

200

250

300

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

US

D/t

on

Northwest Europe marker price

US C.Appalachian spot price index

Japan coking coal import cif price

Japan steam coal import cif price

Asian Marker price

Australia, coking coal, fob

Canada, coking coal

US, coking coal, fas

S.Africa, coking coal

Australia, steam coal, fob

Canada, steam coal

US, steam coal, fas

Colombia, steam coal

Indonesia, steam coal

S.Africa, steam coal

World coal prices by years, Data: BP, IEA

Coal prices have fluctuated in a very narrow range until 2004. As of that year both steam and coking coal

prices entered into a rapid rising period.

While coal prices were almost constant in a 16-year period between 1988 and 2003, since 2004 coal has

seen unusual price increases in its 200-year history.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

V. COAL,

ENVIRONMENT

AND TECHNOLOGY

40

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

CLIMATE CHANGE DEBATE, TECHNOLOGY ISSUES,

AND THE FUTURE OF COAL

41

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

19

65

19

72

19

79

19

86

19

93

20

00

20

07

20

14

CO2 Emissions

(Mtons)

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

19

65

19

72

19

79

19

86

19

93

20

00

20

07

20

14

Coal Consumptions

(Mtoe)

Other

Total Asia

Pacific

EU27

North

America

The relationship between the use of coal and CO2 emissions, Data: BP

I – CO2 emissions

Mankind cannot give up to

use coal.

However, coal mining and

coal utilization are the set of

activities that also have an

impact on the environment

in all stages and that cause

pollution at certain levels.

CO2 emissions that emerge

as a result of burning coal

and that cause global

warming is the most

important problem arising

from coal today.

In what way the effects of

coal causing global warming

can be eliminated, is one of

the most important world

issues today.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

CLIMATE CHANGE DEBATE, TECHNOLOGY ISSUES,

AND THE FUTURE OF COAL

42

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Japan

India

EU-27

US

China

2014

65% of world CO2 emissions are

emitted by five countries and

EU-27.

I – CO2 emissions

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Gas

Oil

Coal

2012

44% of world CO2 emissions

arise from the use of coal.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Industry

and constr.

Electricity

and heat

2012

71% of coal-sourced CO2

emissions is from electricity and

heat production.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: IEA, BP

CLIMATE CHANGE DEBATE, TECHNOLOGY ISSUES,

AND THE FUTURE OF COAL

43

II – Reducing CO2 emissions through improved efficiency and CO2 capture at coal-fired pp

Average worldwide

av

erag

e C

O2

em

issio

ns p

er u

nit

of e

lectr

icit

y

gen

erate

d a

t co

al-

fir

ed p

lan

ts (

gC

O 2

/kW

h)

30%

1,116 g CO2/kWh

480 g coal/kWh EU

38%

881 g CO2/kWh

379 g coal/kWh State-of-the-art

45%

743 g CO2/kWh

320 g coal/kWh Steam power plant

700°C technology

Efficiency

CO2 emissions

Fuel consumption

about 50%

669 g CO2/kWh

288 g coal/kWh CCS technology

But: Efficiency loss of 7 to 12 points

2010 2020 Time

-13%

-27%

-34%

-90%

CO

2 r

ed

ucti

on

Source: EURACOAL

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

FUTURE OF COAL

44

The future direction of coal, in large part, will depend on the developments

that took place on its competing energy sources. However, when viewed

from today, the main factors that will determine the future of coal are likely

to arise from its own internal dynamics of the coal industry.

In this context, it is only possible to make an analysis related with the future

of coal that played a decisive role on the world economies for almost two

hundred years by examining a number of parameters that are separated from

each other, but constantly interacting with one another by the cause-and-

effect relationships and that can be collected under the topics of geopolitics,

environment and technology.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

VI. TURKEY’S

COAL INDUSTRY

OUTLOOK

45

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Soma Coal Mine, Turkey

VI.I. TURKEY’S

ENERGY DEMAND

AND COAL

46 Muğla Milas Mine, Turkey

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

TOTAL PRIMARY ENERGY CONSUMPTION BY SOURCES

47

1973 1983 1993 2003 2013

Natural gas 0,0 0,0 4,6 19,5 37,6

Oil 12,6 17,5 28,4 31,8 33,9

Domestic coal 5,2 7,9 11,8 10,4 14,3

Imported coal 0,0 1,0 4,9 12,2 20,3

Hydro 0,2 1,0 2,9 3,0 5,1

Wood-waste 6,4 8,1 7,1 5,7 4,3

Other 0,0 0,3 0,6 1,3 4,7

0

5

10

15

20

25

30

35

Mtoe

1973 1983 1993 2003 2013

Natural gas 0,0 0,0 7,7 23,2 32,2

Oil 51,4 49,1 47,1 37,9 26,6

Domestic coal 21,3 22,0 19,5 12,3 15,8

Imported coal 0,0 2,9 8,1 14,6 15,5

Hydro 0,9 2,7 4,8 3,6 3,9

Wood-waste 26,1 22,5 11,9 6,8 3,1

Other 0,2 0,8 0,9 1,5 2,8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

%

Consumption growth rate is 43% in the last ten

years and 100% in the last twenty years

Total 24,5 35,7 60,3 83,9 120,3

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

TOTAL PRIMARY ENERGY PRODUCTION BY SOURCES

48

1973 1983 1993 2003 2013

Coal 5,3 7,9 11,5 10,8 15,5

Hydro 0,2 1,0 2,9 3,0 5,1

Wood-waste 6,4 8,1 7,1 5,7 4,3

Oil 3,7 2,3 4,1 2,5 2,5

Natural gas 0,0 0,0 0,2 0,5 0,4

Other 0,0 0,1 0,6 1,2 4,1

0

2

4

6

8

10

12

14

16

18

Mtoe

1973 1983 1993 2003 2013

Coal 33,7 40,7 43,7 45,3 48,4

Hydro 1,4 5,0 11,0 12,8 16,0

Wood-waste 41,0 41,7 27,0 24,2 13,5

Oil 23,6 12,0 15,5 10,5 7,8

Gas 0,0 0,0 0,7 2,1 1,4

Other 0,3 0,5 2,1 5,1 12,9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

%

Total 15,7 19,3 26,4 23,8 31,9 Production growth rate is 34% in the last ten

years and 21% in the last twenty years

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

ENERGY PRODUCTION, CONSUMPTION AND COAL’S

SHARE IN TURKEY

49

0

10

20

30

40

50

60

70

80

90

0

20.000

40.000

60.000

80.000

100.000

120.0001970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

2006

2009

2012

%

thou

san

d t

oe

Energy consumption

Energy production

Coal production

Ratio of energy production to consumption

Ratio of coal production to energy consumption

Turkey’s energy production could be

increased by 21% in the last twenty

years while country's energy

consumption rose by 100%. The

increase in coal production is 34% in

the last two decades.

Therefore, growth rate increase in

energy production is significantly

behind that of energy consumption. The

ratio of domestic production to

consumption has fallen under 27% in

2013 while it was 44% twenty years

ago.

Likewise, the ratio of domestic coal

production to energy consumption has

also declined. This rate has been 12,8%

while it was 19,2% in 1993 and 12,9%

in 2003.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

VI.II. TURKEY’S

COAL

RESOURCES

50 Soma Coal Mine, Turkey

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

51

TURKEY’S COAL RESOURCES

"Bu Artış Bizi Doğalgaz İthal Etmekten Kurtarıyor.» Enerji ve Tabii Kaynaklar Bakanı son 10 yılda 200 milyar dolarlık linyit rezervi bulunduğunu söyledi.

This reserve saves us from the import of natural gas.

Energy and Natural Resources Minister said that $ 200 billion

of lignite reserves discovered in the last 10 years.

Resource: The amount of coal that may be

present in a deposit or coalfield. This does

not take into account the feasibility of

mining the coal economically. Not all

resources are recoverable using current

technology.

Reserves: Reserves can be defined in terms

of proved (or measured) reserves and

probable (or indicated) reserves. Probable

reserves have been estimated with a lower

degree of confidence than proved reserves.

Proved Reserves: Reserves that are not

only considered to be recoverable but can

also be recovered economically. This means

they take into account what current mining

technology can achieve and the economics

of recovery. Proved reserves will therefore

change according to the price of coal; if the

price of coal is low, proved reserves will

decrease.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

323

941

426

38

104

105 73 23

34

1453

238

280

101

139

1934

438

18 704

405

99

637

4832

1311

Turkey has hardcoal resources of 1.3 billion tons and lignite resources of 15.3 billion tons.

52

TURKEY’S COAL RESOURCES

COAL RESOURCES IN SOME REGIONS (million tons)

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

53

TURKEY’S COAL RESOURCES

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Turkey’s hard coal resources in the Zonguldak basin are estimated at some

1.3 billion tons of which 512 million tons are in the proven category. The

calorific value of hard coal resources varies between 6,200 and 7,200

kcal/kg.

Lignite deposits are spread across the country, with proven reserves of

approximately 15.3 billion tons. The quality of Turkish lignites is generally

very poor and only around 6% of the reserves have a heat content of more

than 3,000 kcal/kg.

VI.III. COAL

PRODUCTION AND CONSUMPTION

IN TURKEY

54 Afşin-Elbistan Coal Mine, Turkey

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

55

COAL SUPPLY IN TURKEY

0

10

20

30

40

50

60

70

80

90

100

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

Mto

ns

Coal import

Lignite production

Hardcoal production

0

5

10

15

20

25

30

35

40

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

Mto

e

Coal import

Lignite production

Hardcoal production

In 2014 >> Saleable lignite production: 62.6 Mtons Saleable hardcoal production: 1.8 Mtons Coal import: 30 Mtons

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

2 1

2

10

7

1

10

12

8

1

4 5

1 9

14

41

1

5

3

2

2

22

1

6

4

1

4

1

3

22

1 15

1 10

1

2

4

2

46

1

2

3

1

27

NUMBER OF COAL MINE LICENCES, 2014

Number of coal production licenses : 470 (public: 70, private: 400)

Number of coal mines in production in 2013: 260

56

PRODUCTION SITES

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

0,5

5,0

0,7

0,6

0,2

0,6 1,8 0,4

0,2

0,3

0,4

0,4

0,3

0,1

0,7

8,5

13,5

10,0

2,4

0,3

1,3

12,0

1,8

Total saleable production: 60.4 Mtones in 2013

57.5 Mtons lignite (45.5 Mtons public and 12 Mtons private) 2 Mtons hardcoal (public)

57

PRODUCTION SITES

PRODUCTIONS, MTONS, 2013

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

TTK: Turkish Hardcoal Enterprises (state owned)

TKİ: Turkish Coal Enterprises (state owned)

EÜAŞ: Electricity Generation Company (state owned)

(*) Redevance, procurement or transfer of operating rights

58

PRODUCERS

TTK

71%

TTK(*)

29%

HARDCOAL PRODUCTION, 2014

EÜAŞ

22%

EÜAŞ(*)

9%

TKİ

16% TKİ(*)

14%

Private

Sector

39%

LIGNITE PRODUCTION, 2014

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: TTK, TKİ, EÜAŞ, MENR

59

CONSUMPTIONS

Iron-steel

33%

Electricity

generation

57%

Heating

and other

industry

10%

DOMESTIC HARDCOAL

CONSUMPTION, 2013

Electricity

generation

82%

Industry

8%

Heating

7%

Social aid

program

3%

LIGNITE CONSUMPTION, 2012

Electricity

generation

36%

Iron and

steel

industry

16%

Other

industry

14%

Heating

34%

IMPORTED COAL CONSUMPTION,

2012

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: TTK, TKİ, EÜAŞ, MENR

VI.IV. COAL

IMPORTS

60

Tunçbilek Coal Mine, Turkey

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

61

ENERGY IMPORT OF TURKEY

Oil

38,2 Mtoe

Gas

37,6 Mtoe

Coal, coke,

petrocoke

20,1 Mtoe

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

62

TURKEY ADVENTURE OF IMPORTED COAL

0

5.000.000

10.000.000

15.000.000

20.000.000

25.000.000

30.000.000

35.000.000

0

1.000

2.000

3.000

4.000

5.000

6.000

7.00019

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

ton MW

Imported coal-fired

power plant capacity

Coal import

Coal imports carried out in Turkey since 1973. Imports remained below 10 million

tons until 2000. It increased rapidly to over 20 million tons in 2000s. In 2012 it saw 30

million tons.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

63

COAL IMPORTS BY COUNTRIES

Colombia

31,6%

Russia

29,1%

US

14,5%

S.Africa

13,4%

Ukraine

3,8%

Australia

2,1%

Canada

1,7%

Other

3,8%

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

2014 Data: Turkish Statistical Institute

64

IMPORTED COAL CONSUMPTION BY SECTORS

Electricity generation

36%

Iron and steel industry

16%

Other industry

14%

Heating

34%

2012

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: MENR

VI.V. COAL

AND ELECTRICITY GENERATION

IN TURKEY

65

Afşin-Elbistan Coal-Fired Power Plant, Turkey

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

66

COAL’S SHARE IN POWER PLANT CAPACITY

Domestic

coal

12,1% Imported

coal

8,4%

Other

fuels

79,5%

October, 2015

0

5

10

15

20

25

30

35

40

45

0

10

20

30

40

50

60

70

80

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

%

GW

Domestic coal

Imported coal

Other fuels

Domestic coal's share

Imported coal's share

Domestic coal’s share in installed electricity capacity dropped to 12.2% from 30.2% between the years 1994 and 2014. The share of imported coal increased to 6.5% from zero in the same period.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: Turkish Electricity Transmission Company

67

COAL’S SHARE IN ELECTRICITY GENERATION

Domestic coal’s share in electricity generation was 13.6% and imported coal’s share was 13% in 2014.

Domest

ic coal

16,0%

Importe

d coal

13,9% Other

fuels

70,1%

2014

0

10

20

30

40

50

60

0

50

100

150

200

250

300

19

84

19

87

19

90

19

93

19

96

19

99

20

02

20

05

20

08

20

11

20

14

% GW

h

Domestic coal

Imported coal

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: Turkish Electricity Transmission Company

0

2000

4000

6000

8000

10000

0

200

400

600

800

1.000

1.200

19

57

19

59

19

61

19

63

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

MW MW

Annual capacity increment Total domestic coal-fired plant capacity

2000-2014

1943 MW

1980-2000

5610 MW

… - 1980

1370 MW

Est

abli

shm

ent

of

TK

İ (1

95

7)

Oil

crises

Law on

state-run

mines,

2172

(1978)

Est

abli

shm

ent

of

TT

K (

1982)

Entr

y o

f E

ÜA

Ş (

1989)

68

DOMESTIC COAL-FIRED POWER PLANTS

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Total installed capacity (October, 2015) 72.156 MW

Domestic hardcoal-fired capacity 335 MW (%0.5)

Domestic lignite-fired capacity

(including asphaltite)

8.529 MW (%11.8)

Imported coal-fired capacity 6.064 MW (%8.4)

Total electricity generation (2014) 251.963 GWh

Generation from domestic coal-fired

power plants

40.223 GWh (%16.0)

Generation from imported coal-fired

power plants

35.086 GWh (%13.9)

New plant capacity installed in 2000-2014

Domestic coal 2.354 MW (%4.6)

Imported coal 6.064 MW (%11.8)

Natural gas 22.319 MW (%43.6)

Renewables 5.193 MW (%10,1)

Hydro 15.495 MW (%30,3)

Liquid fuels -224 MW

Total 51.201 MW

Domestic coal-fired large-scale power plants

Power plant MW Power plant MW Power plant MW

Afşin-Elbistan A 1.355 Kangal 457 Soma B 990

Afşin-Elbistan B 1.440 Kemerköy 630 Tunçbilek A 65

Çan 320 Orhaneli 210 Tunçbilek B 300

Çatalağzı 300 Seyitömer 600 Yatağan 630

Çayırhan 620 Soma A 44 Yeniköy 420

Weighted

average age of

total 43 power

plant units:

24

69

COAL FIRED POWER PLANTS IN TURKEY

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

1320MW

725MW

1605MW

1920MW

600MW 1500MW

350MW

1000 MW 1390 MW 1200 MW

190MW

İnşaat halinde

İşletmede

In operation: 5.463 MW

Share in total installed capacity: 8%

In construction: 6.345 MW

Share in total installed capacity: 9%

70

IMPORTED COAL-FIRED POWER PLANTS IN

OPERATION OR CONSTRUCTION, 2015

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: Energy Market Regulatory Authority

71

IMPORTED COAL-FIRED POWER PLANTS IN

EXAMINATION FOR PRODUCTION LICENSE, 2015

8199 MW

1200 MW

800 MW 4865 MW

1220 MW

200 MW

1860 MW

2772 MW

2400 MW

4065 MW 660 MW

1010 MW

1550 MW

In examination: 30.800 MW

Share in total installed capacity : 45%

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: Energy Market Regulatory Authority

72

COAL-FIRED POWER PLANTS IN OPERATION,

CONSTRUCTION OR PRE-EXAMINATION, 2015

0

5000

10000

15000

20000

25000

Domestic coal Imported coal

MW

In operation

In construction

In examination

0

50000

100000

150000

200000

250000

Domestic coal

consumption

Domestic coal CO2

emission

Imported coal

consumption

Imported coal CO2

emission

bin

ton

In examination

In construction

In operation

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

Data: Energy Market Regulatory Authority

VI.VI. TURKISH COAL INDUSTRY

AND PUBLIC POLICIES:

ON THE BRINK OF CHANGE

73

Tunçbilek Coal Mine, Turkey

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

74

POLICY MAKER IN TURKISH COAL INDUSTRY: MENR

MINISTER UNDERSECRETARY

GD OF ENERGY

WORKS

GD OF MINING

WORKS

GD OF RENEW-

ABLE ENERGY

GD OF OIL WORKS DEPT. OF STRATEGY

DEVELOP.

GD OF FOREIGN

RELATIONS&EU

DEPT. OF NUCLEAR ENERGY

DEPT. OF SUBS.

AND REL.INST.

DEPT. OF TRANSIT

OIL PIPELINES

DEPT. OF FINAN.&

ADM. AFFAIRS

GD OF MINERAL RESEARCH AND

EXPLORATION

TURKISH ATOMIC

ENERGY AUTHORITY

HEAD ORGANIZATION

SUBSIDIARIES

RELATED INSTITUTIONS

ELECTRICITY

GENERATION CO.

ELECTRICITY TRANSMISSION CO

ELECTR. TRADE& CONTRACTING CO.

TURKISH

PETROLEUM COM.

BOTAŞ PETROLEUM

PIPELINE CORP.

TURKISH COAL

ENTERPRISES

TURK. HARDCOAL

ENTERPRISES

ETI MINE WORKS

GD

TEMSAN

ASSOCIATED INSTITUTIONS

ENERGY MARKET

REGULATORY AUTHORITY

NATIONAL BORON

RESEARCH INSTITUTE

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

75

SOME RELATED LEGISLATION

Constitution of the Republic of Turkey, Decree Law on State Economic Enterprises, Law on the Organization and Duties of the Ministry of Energy and natural resources, Law on Privatization Applications, Decree Law on on Civil Servants, Turkish Criminal Code, Labour Law, Law on Special Safety Services, Law on Trade Unions, Law on Public Sector Employees’ Union, Law on Social Security and General Health Insurance, Mining Law, Law on Environment, Law on Municipalities, Law on Provincial Administration, Village Law, Forest Law, Electricity Market Law, Energy Efficiency Law, Law on Protection of Cultural and Natural Heritage, Public Tenders Law, Law on Public Tender Contracts, Turkish Code of Commerce, Tax Laws, Law of Regulating Public Financing and Debt Management, Banking Laws, Decree Law on State Economic Enterprises, Decree law on the Establishment and Duties of State Planning Organization and too many more…

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

76

EMPLOYMENT

There is no any comprehensive study to determine the

employment in the sector.

However, direct employment in the coal industry is estimated to

be around 55.500 people; 18.500 in hardcoal sector and 37.000

in lignite sector.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

77

TRANSFORMATION IN TURKISH COAL INDUSTRY

Turkey’s coal industry is in the process of a significant structural

transformation.

Given the gaining momentum of the recent work in this

direction, public enterprises are highly likely to leave their

places to the private sector in a short time.

Looking at the developments, it seems that Turkey’s coal

industry is on the verge of a major transformation.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

78

Public institutions increasingly prefer service procurement from

private companies for production and overburden removal

activities instead of using their own machinery park.

I – SERVICE PROCUREMENT

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

TRANSFORMATION IN TURKISH COAL INDUSTRY

79

II – PRIVATIZATION OF THERMAL POWER PLANTS AND COAL FIELDS

Model: Private placement for power plant and transfer of operating rights for coal fields

Power plant Fuel

Plant

capacity

(MW)

Coal

reserve

(Mton)

Ownership Mine license Date of

privatization

Seyitömer Lignite 600 170 EÜAŞ=>Private TKİ=>Private June 2013

Yatağan Lignite 630 150 EÜAŞ=>Private TKİ=>Private May 2014

Yeniköy Lignite 420 250

EÜAŞ=>Private TKİ=>Private April 2014

Kemerköy Lignite 630 EÜAŞ=>Private TKİ=>Private

Kangal Lignite 457 90 EÜAŞ=>Private EÜAŞ=>Private August 2013

Çatalağzı Hardcoal 300 EÜAŞ=>Private TTK May 2014

Soma Lignite 990 720 EÜAŞ=>Private TKİ December 2014

Çanakkale Çan Lignite 320 75 EÜAŞ TKİ

Orhaneli Lignite 210 35 EÜAŞ=>Private TKİ=>Private December 2014

Tunçbilek B Lignite 300 250 EÜAŞ=>Private TKİ December 2014

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

TRANSFORMATION IN TURKISH COAL INDUSTRY

80

II – PRIVATIZATION OF COAL FIELDS

Planned model: Public-private partnership + international agreement

Power plant Fuel

Plant

capacity

(MW)

Coal

reserve

(Mton)

Ownership Mine

license

Date of

privatization

Afşin-Elbistan A Lignite 1355 5000 EÜAŞ EÜAŞ ?

Afşin-Elbistan B Lignite 1440

Konya

Karapınar Lignite 2000 EÜAŞ EÜAŞ ?

Afyon-Dinar Lignite 1000 EÜAŞ EÜAŞ ?

Eskişehir-Alpu Lignite 1000 EÜAŞ EÜAŞ ?

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

TRANSFORMATION IN TURKISH COAL INDUSTRY

81

II – PRIVATIZATION OF COAL FIELDS

Model: Transfer of coal-fields to the private sector provided that they will build power plants

Power plant Fuel

Plant

capacity

(MW)

Coal

reserve

(Mton)

Date of

commencement of

electricity

generation

AdanaTufanbeyli Lignite 700 323 2018

Bingöl Karlıova Lignite 150 104 2019

Bolu Göynük Lignite 270 38 2015

Bursa Orhaneli, Keles, Davutlar Lignite 270 106 2018

Manisa Soma Lignite 450 720 2018

Kütahya Tunçbilek Lignite 300 262 2019

Eskişehir-Mihalıççık Lignite 290 130 2016

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

TRANSFORMATION IN TURKISH COAL INDUSTRY

82

TRANSFORMATION IN TURKISH COAL INDUSTRY

COAL PRODUCTION BY YEARS

0

10

20

30

40

50

60

70

801

99

0

199

2

199

4

199

6

199

8

200

0

200

2

200

4

200

6

200

8

201

0

201

2

201

4

Mto

ns

Private sector

EÜAŞ

TKİ

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

83

EXPECTATIONS AFTER TRANSFORMATION Increase in productivity Decrease in cost and price Rise in occupational safety and health standards Ecofriendly operations Growth in domestic coal-fired electricity generation capacity

TRANSFORMATION IN TURKISH COAL INDUSTRY

BUT,

GENERAL CHARACTERISTICS OF NEWCOMERS Weak institutionalization Low levels of institutional culture Weak capital structures Minimal investments to human resources, coal explorations, R&D,

occupational safety-health and environment. These are seen as only cost-increasing factors.

Limited engineering quality

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

VI.VII. FUTURE OF DOMESTIC COAL

IN TURKEY

84

Tunçbilek Coal Mine, Turkey

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

85

ENERGY DEMAND PROJECTION

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

0

50

100

150

200

250

1971

1975

1979

1983

1987

1991

1995

1999

2003

2007

2011

2015

2019

2023

2027

mto

e

Primary

energy

demand

Final energy

demand

Power plant's

demand

Household

heating

demand

0

100.000

200.000

300.000

400.000

500.000

600.000

0

50.000

100.000

150.000

200.000

250.000

1971

1976

1981

1986

1991

1996

2001

2006

2011

2016

2021

2026

Ele

ctri

city

gen

erati

on

, G

Wh

Inst

all

ed c

ap

aci

ty, M

W

Installed

Capacity

(MW)

Electricity

generation

(GWh)

86

PRIMARY ENERGY DEMAND AND

DOMESTIC COAL SUPPLY

Assuming that no change in the existing lignite production, the ratio of domestic coal production to primary energy demand will drop to 9.8% in 2020 and to 6.4% in 2030.

Domestic coal production should be raised to 108 million tons in 2020 and to 165 million tons in 2030 to maintain its current share in total primary energy demand.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

0

5

10

15

20

25

30

35

0

100

.00

0

200

.00

0

300

.00

0

Rat

io o

f co

al p

rod

uct

ion

to

TP

ES

(%

)

Coal production (thousand ton)

2020

2030

87

ELECTRICITY GENERATION CAPACITY AND

DOMESTIC COAL

The ratio of total installed

capacity of domestic coal-

fired power plants to the

installed capacity of the

electricity system will fall

to the level of 8.8% in

2020 and 4.7% in 2030 in

case of no new domestic

coal-fired plants will put

into service.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

0

5

10

15

20

25

30

35

0

10.0

00

20.0

00

30.0

00

Rat

io o

f do

mes

tic

coal

-fir

ed c

apac

ity

to

to

tal

capac

ity o

f sy

stem

(%

)

Domestic coal-fired capacity (MW)

2020

2030

REFERENCES (I)

88

• British Petroleum, Statistical Review of World Energy, 2015. • Energy Watch Group, Coal: Resources and Future Production, EWG-Paper No. 1/07, 2007. • European Association for Coal and Lignite (EURACOAL), A Strategy for Clean Coal, Brussels, November

2012. • European Association for Coal and Lignite (EURACOAL), Coal Fuel for the 21th Century, Brussels. • European Association for Coal and Lignite (EURACOAL), Coal Industry Across Europe 2011, Brussels,

2011. • European Commission DG JRC Institute for Energy, The Future of Coal, Netherlands, February 2007. • Federal Institute for Geosciences and Natural Resources, Reserves, Resources and Availability of Energy

Resources 2010, Hanover, 2009. • Global CCS Institute, Large Scale CCS Projects, <http://www.globalccsinstitute.com/projects/large-scale-

ccs-projects>, Erişim tarihi: 19 March 2015. • IEA Coal Industry Advisory Board (CIAB), Power Generation from Coal - Measuring and Reporting

Efficiency Performance and CO2 Emissions, Paris, 2010. • International Energy Agency, Coal Information 2015. Paris. • International Energy Agency, CO₂ Emissions from Fuel Combustion, Paris, 2014. • International Energy Agency, Data Services, <http://wds.iea.org >. • International Energy Agency, Energy Technology Perspectives 2010: Scenarios and Strategies to 2050,

OECD/IEA, Paris, 2010. • International Energy Agency, Key World Energy Statistics 2003-2014. • International Energy Agency, Natural Gas Information 2014, Paris. • International Energy Agency, Oil Information 2014, Paris. • International Energy Agency, Tracking Clean Energy Progress 2014, OECD/IEA, Paris, 2014. • Kavalov, B., Peteves, S. D., The Future of Coal, DG JRC Institute for Energy, February 2007.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

REFERENCES (II)

89

• Laherrère, J., “Peak oil and other peaks”, Presentation at the CERN meeting, 3 Ekim 2005. • Massachusetts Institute of Technology, The Future of Coal, 2007. • Massachusetts Institute of Technology, Carbon Capture and Sequestration Technologies,

<https://sequestration.mit.edu/index.html>, Access date : 19 March 2015. • Ministry of Energy and Natural Resources, Energy Balance Tables, 1970-2015. • Ministry of Energy and Natural Resources, Strategic Plan, 2015-2019. • Stanley P. Schweinfurth, An Introduction to Coal Quality, Chapter C of The National Coal Resource

Assessment Overview, Edited by Brenda S. Pierce and Kristin O. Dennen, U.S. Geological Survey Professional Paper 1625–F, U.S. Department of the InteriorU.S. Geological Survey.

• Tamzok, N., “Türkiye Enerji Politikaları İçerisinde Kömürün Önemi”, TMMOB V. Enerji Sempozyumu Bildiriler Kitabı, Ankara, 21-23 Aralık 2005.

• Tamzok, N., “Küreselleşme, Serbestleşme ve Kömür Endüstrisi” [Globalization, Liberalization and Coal Industry], Temiz Kömür Teknolojileri ve Yakma Teknikleri Semineri Bildiriler Kitabı [Seminear on Clean Coal Technologies and Combustion Techniques, Proceedings Book], Afşin-Elbistan, November 2007.

• Tamzok, N., Linyitlerin Türkiye Enerji Sektöründeki Yeri (1970-2030) [Lignites Role in Turkish Energy Sector, 1970-2030], Ankara, August 2013.

• Tamzok, N., “Kömürün Geleceği” [Future of Coal], 8th Energy Symposium Proceedings Book, İstanbul, November 2011.

• The Chamber of Mining Engineers of Turkey, 2015. Energy and Coal Report (Turkish). Mehmet Güler et al., Ankara, July 2015, p.80-85.

• Turkish Electricity Transmission Company, Electricity Generation and Transmission Statistics, 1970-2015. • Turkish Statistical Institute, Coal Import Statistics, 2014. • World Coal Institue (WCI), The Coal Resource - A Comprehensive Overview of Coal, London-UK, 2005. • World Energy Council (WEC), Survey of Energy Resources 2010, London, 2010.

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University

90

THANK YOU…

Dr. Nejat Tamzok

[email protected]

[email protected]

https://independent.academia.edu/NejatTamzok

https://www.researchgate.net/profile/Dr_Nejat_Tamzok/contributions

Coal in the World and in Turkey – Outlook, geopolitics, policies and future prospects, Dr. Nejat Tamzok

Energy Economics, Policy and Security (Master of Arts Program ) - Faculty of Economics, Administrative and Social Sciences – Bilkent University